Gold Prices Plummet to Two-Week Low Amid Fed Rate Hike Bets
Gold prices fell for a third consecutive session on Tuesday, hitting a two-week low as bond yields surged to their highest level since 2008 and traders increased bets of a Federal Reserve rate hike to nearly 70%.
The Comex gold for December delivery dropped by as much as 2.4% to $4,374.10 an ounce in New York, its weakest price since August 19, before recovering slightly to $4,398.90, down 1.8% on the day. Spot gold also fell 1.7% to $4,362.57.
The decline in gold prices comes as a result of rising bond yields and a strengthening dollar, which are headwinds for metals that offer no income. Fed Governor Michael Barr said the central bank should be prepared to raise rates if inflation fails to subside, warning that price pressures risk becoming entrenched after more than five years above target.
The miners' sector also felt the impact of gold's decline, with Eldorado Gold down 3.2%, Agnico Eagle 2.8%, Equinox Gold 2.7%, Alamos Gold 2.7%, and Gold Fields 2.5%. The NYSE Arca Gold Miners Index climbed 33% in August, its best August since at least 1994.